How the REA / Value Flows model can change the world: Lynn Foster of Mikorizal (Part 2)

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Posted Nov 10 2019 by Lynn Foster of Mikorizal
Lynn Foster explains the value flows model

Here’s the second part of our interview with Lynn Foster of Mikorizal and the Value Flows model. Part 1 is here.

Dave: But for me it’s all about system change – so I want to get how what you’re doing contributes to system change. I mentioned something you wrote that jumped out at me: ‘We have in mind an operating system for a new economy’. What did you mean by that? How do we get to this new economy?

Lynn: A lot of it is working on the details, and a lot of it is working with other people, so that everyone can try to get on the same page / pull in the same direction. I hope we have time to get things in place. I suspect we don’t, but I would rather try.

It sounds like what you’re doing could allow networks of small, local businesses, including co-ops and sole traders, to come together to get some of the benefits that large corporations have, in their size and reach.

I think that’s right – want to try it, in London?

I do.

Let’s do it!

But – crucially – it also sounds like your work is to do with the ‘real’ economy – i.e. people who’s day involves producing useful products and services, rather than people who’s day involves working out how to invest, speculate, lend and rent to make more money.

That’s true – we’re very focused on use-value, to use an old term; and on trying to build an economy in which we can collectively decide on our limits, and what we do need. It’s pretty solidly anti-capitalist.

That was my next question. So if the new economy is not capitalism, what is it?

I hesitate to use any words that will freak anyone out, or could be defined in 20 different ways, but it’s definitely not capitalism. All that drive towards expansion and silly speculation. We can’t afford all that.

I just heard on the radio that Greene King – a brewery in the south of England – has just been bought by a Hong Kong consortium that also owns the 3 mobile network and SuperDrug. But they’re clearly not interested in making beer. They’re not brewers. The only reason they’ve done this is to try to make lots of money. So I’ll never drink Greene King beers again. But lots of small breweries are getting eaten up by large conglomerates, who are not interested in beer – just money. I don’t want to support them. I want to support small, local breweries – but it’s getting harder and harder to find them. So I’m hoping that people like you can come up with the tools to allow small businesses to thrive instead of being pushed out by the corporate sector.

I hope so too. Beer vs money. Hmmm.

I’m on the platform coops email list initiated by Nathan Schneider. I don’t know if you’re on it too.

I’m not, but I know Nathan – we’ve chatted briefly.

I don’t comment often, and when I do, it’s about wider political issues rather than tech. But on that list, recently there’s been talk about several ideas that are, in effect, blueprints for a new economy. I have a bit of a problem with blueprints. It’s usually one person, working on their own, then presenting a finished plan to a grateful world. I don’t think that’s going to work. The plans are usually 30 pages long – and no-one is going to even read them. And we already have people building the new economy – community energy, community-supported agriculture, co-ops, free/open source software – plus REA accounting, mutual credit etc. There are lots of things happening, that together can constitute the new economy. Could your work dovetail with these initiatives, including a moneyless / mutual credit economy?

I sure hope so. That is certainly the goal, and the model will certainly support that. I hope we can all get our act together. We love to work with people building things on the ground. I’d love to get together with people building the new economy to hash out some details, to see if we can pull in the same direction; and anyone who wants to build something practical on the ground, let us know.

I guess my question was about wealth concentration. If wealth continues to concentrate, we can say goodbye to democracy. And if there’s conventional money, how do we stop it concentrating? Mutual credit is a moneyless system, and is based on trusted relationships. Could your work help to build in things like reputation building?

Mutual credit itself is something that can definitely be accounted for. In fact mutual credit is itself, basically an accounting system. You keep track of all transactions with mutual credits in a ledger. I like mutual credit because it has built-in constraints – it’s not just about people building wealth forever. It would be great if we could talk sometime about how to integrate mutual credit and production in the economy. Wouldn’t it be great to use mutual credit to allow people to start things, that usually takes a bit of up-front investment and resources?

Also – more and more people are understanding now that banks create money from nothing. When you take out a mortgage, for, say, 100k, the bank didn’t have that 100k. They just put it into your account, and say that you now owe them 100k, plus interest. They account for it using double-entry book-keeping. They record your debt to them as an asset, and they record the 100k in your account as a liability. They cancel each other out, and disguise the fact that they’ve just created 100k, as debt, from nothing, but with interest attached. This is the way money is created. But for me, it’s fraudulent. I read that your system replaces double-entry book-keeping. So would it kill this kind of zero-reserve banking?

It wouldn’t have to. The system itself is pretty agnostic. It can be used for conventional banking, or it can be used for things that are way more positive than that – people and organisations doing real things and creating useful things for other people, rather than pure extraction. People’s social relations have to change, and we have to get rid of opportunities to extract and exploit. That’s above the level of REA. Mutual credit can put limits on that kind of behaviour.

How did you get into all this? How did you learn?

Well, I’ve been an activist all my adult life. I was involved in the Civil Rights movement, the anti-Vietnam War movement, the women’s rights movement. There was a lot going on, and a lot of people becoming politicised, in my generation. I’ve never lost that. I gained skills as a software developer, and had that as a day job, while I raised a couple of kids. Those skills are useful to the movement in general, so here I am.

What successes have you had so far?

We’ve had individual, small successes. We’ve proved the model, I think. We’ve developed a vocabulary that will need improvement, but is a good basis to start creating software that can talk to each other, and applications. People can put all sorts of things together that can give a lot of flexibility. We’re just starting a range of projects that are committed to using value flows, but those are not showing results you can see yet. Hopefully they’ll be successful, although I try not to get too personally attached, because this needs to be for the commons – for everybody, especially young people. I feel like some of the ideas are beginning to take hold.

How do you think you can communicate what you do to people working in the new economy – how can they incorporate it in their work?

There’s some documentation on value flows, but I think right now, a lot of it needs to be person to person. We need to be talking to people who want to do things on the ground in the peer-to-peer economy. The more people who learn about it the better. We need to pass this along to younger people. These kinds of interviews will help too, I guess.

What’s the most useful thing that I, for example, could do to help?

I think we definitely need a chat about mutual credit and REA, and how to promote small, local businesses. We should be doing more of that stuff ourselves, but we’re focused a lot on getting REA accounting working, on the ground with real groups.

Why would people in real groups, working on the ground, want to come to you? What’s the hook?

That’s a good question. One of the projects we’re working with at the moment is Holochain – and they’ve seriously bought into REA. This is how they want to conduct their economic activity, in that software environment. They see it as accounting that can work for a networked economy. People see the power of it when they understand the model and start to think about it in their terms. One of the groups trying to build an application on Holochain is trying to bring together farmers, processors and restaurants, for example. When they could see how the REA / value flows model works – and you can see what’s fair, and you can see where things came from and where they go, and you can see what’s coming, they see how powerful it can be.

Some people are really attracted to the fact that you can build a contributive economy (that rewards people based on their contributions), since you can keep track of everything that went into something, as far back as you want to go. This works really well for people building free/open source software, who often are not rewarded properly. Everyone who contributes can be rewarded based on an agreed-upon formula. A lot of groups are attracted to that.

It sounds like what you’re doing would dovetail with mutual credit really well. Some jobs, especially those that are aiming to change the system, don’t get rewarded very well. But with mutual credit, we can all reward each other. Often, I’ve found that appealing to people’s self-interest works better than appealing to people based on trying to change the world. Even people I would really consider early adopters, have said that they’ll do things as simple as switching suppliers, only when everyone else does it. But someone has to take the lead and start pushing things in a different direction, or it’s not going to happen.

That’s definitely a problem, because the new economy needs critical mass – it needs the network effect, so it really is hard to get going, and I guess we need to start with people who really get it and want to do something useful before we kill ourselves.

It’s difficult to find who those people are. Even talking to people in the Transition movement or people who go on XR marches, and they’re not early adopters. So it’s an even smaller group than that. It’s looking as though appealing to self-interest might be the best way to attract people.

That’s OK. And I guess especially when people realise that their self-interest is actually the same as the collective interest.

I’m interested in working out how to connect different projects together. I’m talking with Jon Walker and Angela Espinosa about using the viable system model to help connect the ‘new economy’ in ways that will remain decentralised. Do you know about the VSM? What do you think about it?

Yes, I know about it. I think we could have a very interesting discussion about how to connect VSM and REA / value flows. We had a conversation some years ago with some VSM people who I think were working within the P2P Foundation, but it fell apart because of illness. It would be very interesting to try it again.

What ambitions do you have? What’s next?

Next is to get through the current round of projects, and to see what that practice brings us. We’ll hopefully learn a lot about how to solve technical and practical problems in lots of areas. We’ll make more tweaks to the model. More people would be great too.

What are the biggest obstacles you face?

Getting people to understand the model, and to adopt it for collective reasons rather than just through self-interest; but also how to get all these people doing such great things together to start to be able to pull the same way a little more.

Somebody watching / reading this, who thinks ‘yes, I’d like to get involved’. What can they do?

Well they could contact us, and I guess they could contact you?

Sure. We’re building a mutual credit network in the UK, but your work could be anywhere in the world, couldn’t it?

It is – we work with people all over the place.

I guess if you, and other ‘new economy’ businesses and organisations had a mutual credit account (in various countries, and eventually in a global system), people could pay each other in mutual credit and we could use that credit to help build the new economy in ways that can’t be extracted by the corporate sector.

That would be an interesting experiment – to see if we could get critical mass to make some of that real.

What do you think the future holds? Is capitalism going to collapse, and will we have infrastructure in place to allow people to get the things that they need if/when it does?

I suspect it will. It can’t go on forever the way it is now, and it doesn’t know how to do things differently. Who knows what pressures will come first, and how the climate will fit into it. There are so many unknowns. I hope we can have enough things in place, and have enough self-awareness to not fall into chaos / warlordism / who knows?

Where can people can keep up to speed with what you’re up to?

We should have a blog. People can contact us through Mikorizal. We’re not good at newsletters either. But if people contact us we’ll make sure they get slotted into areas that interest / make sense to them.

For introductory information, should people go to Value Flows or Mikorizal?

Value Flows has a lot of explanation of the vocabulary. Mikorizal is our sort-of lame, out-of-date website what we’re up to.

Lame and out-of-date eh? You should be a salesperson. So I’ll subscribe you to the NonCorporate blog, so you can check out other interviews. And who else should I interview?

I probably know lots of people you could interview – I’ll let you know.

And do you think REA accounting should be a Lowimpact topic? We have 220+ topics, and we have an economy section.

It could be. Send me the links and I’ll take a look.

I recently interviewed someone about ‘commoning’, so that’s going to be a topic in the economy section. REA accounting / value flows seems like it would fit well alongside that.

People are becoming more interested, so yeah, why not?

In that case, I’ll definitely be talking with you again at some point.

Perfect.

Highlights

  1. I hesitate to use any words that will freak anyone out, or could be defined in 20 different ways, but it’s definitely not capitalism. All that drive towards expansion and silly speculation. We can’t afford all that.
  2. We love to work with people building things on the ground. I’d love to get together with people building the new economy to hash out some details, to see if we can pull in the same direction; and anyone who wants to build something practical on the ground, let us know.
  3. It would be great if we could talk sometime about how to integrate mutual credit and production in the economy. Wouldn’t it be great to use mutual credit to allow people to start things, that usually takes a bit of up-front investment and resources?
  4. I guess we need to start with people who really get it and want to do something useful before we kill ourselves.